At six-year high, new-home sales remain on upward track

WASHINGTON (MarketWatch) — Sales of new homes in September rose slightly and hit a six-year high even though purchases earlier in the summer were not nearly as strong as initially reported.

The pace of new home sales edged up 0.2% last month to an annual rate of 467,000, compared to a revised 466,000 in August, the government said Friday.

New-home purchases for August were revised down sharply from an initial estimate of 504,000 and the Commerce Department also trimmed the sales figures for July and June. The report is notoriously volatile and often subject to sharp monthly revisions.

Still, new home sales in September were the highest since July 2008. And sales of new homes are 17% higher now compared to the same month in 2013, a sign that the housing market continues to get healthier. Home prices are rising at a slower pace and 30-year mortgage rates have fallen back below 4%, making houses somewhat more affordable.

“Despite the negative revisions, the new data doesn’t change the overall picture of a gradually improving housing market,” said Andrew Grantham, senior economist at CIBC World Markets.

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Sales jumped 12.3% in the Midwest and rose 2% in the South. Sales were flat in the Northeast and they fell 8.9% in the West.

The median price of new homes sold fell 4% from a year earlier to $259,000, marking the lowest level since August 2013.

Buyers tend to purchase smaller homes after the summer winds down and the cooler season gets underway. In September, sales of houses costing $199,999 or less increased while purchases of properties priced from $300,000 to $499,999 declined.

The supply of new homes on the U.S. market, meanwhile, was flat at 5.3 months at the current sales pace.

Since figures for new-home sales often swing sharply from month to month and it helps to look at a longer time frame to figure out where the market is headed. New-home sales averaged an annual rate of 446,000 in the third quarter, up 15% from the same three-month period in 2013.

Home sales remain well below the prerecession peak, however, and it could take several years or longer before the market returns to normal, economists say. At the market’s peak before the Great Recession, new home sales hit a a record 1.3 million.

An exchange-traded fund of home builders
XHB, -0.39%
was slightly weaker Friday and is down 2% over the last 12 months.

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